Havilah Resources - Kalkaroo Dome

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Kalkaroo Project (Copper-Gold-Molybdenum)

Summary

Kalkaroo is a medium size copper-gold deposit containing over 320,000 tonnes of copper and almost 1 million ounces of gold in a measured resource of 62.5 million tonnes of 0.52% copper and 0.48 g/t gold. The deposit is amenable to a bulk mining operation at the rate of 4.5 Mtpa for a period of twelve years. At projected long term copper price of US$6,600 /t and gold price of US$1,000 / oz, the project produces a cash surplus of A$605 million.

History of Exploration

Kalkaroo was explored by a number of major mining groups in the past including Placer, Newcrest Mining and MIM Exploration, who completed more than 45,000 metres of drilling in the region. Following a detailed evaluation of all historic exploration data, Havilah developed a 3D geological model of an interpreted copper resource envelope which it commenced drill testing in July 2004. This model was not tested by previous explorers.

Over the following six months Havilah completed twenty-one 100m spaced drill traverses over a strike length of 2000 metres and achieved wide ore grade copper and gold intersections on every section line, such as the following:

78 metres of 0.90% copper and 0.61 g/t gold in KKRC006
36 metres of 3.13% copper and 0.98 g/t gold in KKRC039
42 metres of 1.37% copper and 1.66 g/t gold in KKRC022

Click to enlarge

Subsequent drilling campaigns expanded the mineralisation to the west, in an area known as West Kalkaroo, where some of the best drilling results were obtained, including 102 metres of 0.83% copper and 1.6 g/t gold in KKRC136.

During the exploration phase Havilah's drilling was restricted to RC percussion drillholes that were somewhat limited in depth owing to frequent high water inflows. Where Havilah's drillholes duplicated earlier explorer's drillholes there was invariably good correlation of assays, providing a high degree of confidence in the drill results.

Geology

Kalkaroo is a replacement style copper-gold-molydenum orebody located on the northern faulted portion of a major structural dome. Hydrothermal fluids have replaced particular favourable units in a 150-200 m thick mine sequence package of rocks. Structural preparation by major cross-cutting faults appears to have been important in creating open spaces and channeling mineralizing solutions. Excellent exploration potential exists in unexplored strike extension of the mine sequence.

Click to enlarge
Oblique diagrammatic view across the Kalkaroo north and south domes (multi‐colour outline)
showing the main cross structures (dashed white lines). Note the close spatial relationship
between the Kalkaroo fault zone and the Kalkaroo orebody and the new copper discoveries
that are closely related to other faults transecting the domes.

In gross shape the Kalkaroo orebody forms an arcuate, north- dipping sheet, which is disrupted by extensive faulting at its western end. The ore is sandwiched between well defined footwall and hangingwall rocks, and is remarkably predictable and consistent over the entire 2.5 km of strike known from resource definition drilling.

Click to enlarge
The Kalkaroo orebody (yellow) sits between footwall (blue) and hangingwall (green) and is cut by faults

A 3D fly-through model of the Kalkaroo orebody can be viewed at:
http://www.youtube.com/watch?v=mL5V5b4MADs

The orebody shows typical supergene enrichment features in its upper part, caused by oxidation of the primary sulphides in the weathering zone. This is manifest in a stratification of the ore minerals from top to bottom, forming four main ore types as follows:

1. Supergene free gold, with generally minor copper, largely recoverable by gravity methods.
2. Native copper and gold, largely recoverable by gravity methods.
3. Chalcocite dominant with gold, recoverable by conventional flotation.
4. Chalcopyrite dominant with gold, recoverable by conventional flotation.

The proportions of the four ore types comprising the Kalkaroo orebody are summarized in the following table.

Mineralisation Type	Cu%	Au g/t	SG	Total Volume	Total Mass	% Total Ore
Saprolite Gold	0.18	0.89	2.03	4,298,202	8,703,698	14
Native Copper	0.76	0.61	2.10	5,309,966	11,134,488	18
Chalcocite	0.62	0.39	2.47	8,248,897	20,354,395	32.5
Chalcopyrite	0.45	0.34	2.67	8,360,786	22,317,451	35.5
Total	0.53	0.48	2.38	26,217,851	62,510,031	100

Feasibility Study

A $14m feasibility study was completed on the Kalkaroo project in 2010, with funding provided by Glencore International. Based on some 353 drillholes totalling 64,457 metres of drilling, Havilah's geologists developed a detailed geological model of the Kalkaroo deposit from which a measured resource of 62.5 million tonnes of 0.52% copper and 0.48 g/t gold was estimated. This resource is tightly constrained by a $20 ore value boundary or cut-off, created using a copper price of A$5,000 per tonne and a gold price of A$1,000 per ounce. This, combined with the excellent continuity of mineralisation between drill sections, provides a high level of confidence in the integrity of the Kalkaroo orebody, suppporting its measured resource status in accordance with the JORC code for reporting mineral resources. The potential to define further ore outside of the present measured resource is high and would be expected to add further resources in the indicated and inferred categories in future. The table at the end of this report summarises important geological parameters relevant to the resource estimate.

Molybdenum, while ubiquitous in the Kalkaroo orebody, was excluded from the above resource estimate although a discrete inferred resource of 4.5 mt of 615 ppm molybdenum was defined within a section of the main copper-gold orebody.

Based on the geological resource model a mining model was developed for a 4.5 million tonne per annum ore throughput at various metal prices and using current estimates of capital and operating costs as summarized in the following table.

Cu price US $	% current Cu price	Ore Mined million t	% Resource	Waste Mined million t	Mine Life	Cash surplus million $
4,400	56.4	44.8	72	205	10	185
5,500	70.5	52	83	243	11.5	382
*6,600	84.6	Est 54	Est 86.4	Est 300	Est 12	Est 605

Summary of mine design and financial analysis figures for various copper prices *A detailed mine design has not been completed for this copper
price and the figures quoted are estimates based on optimized open pit designs, and hence have a greater margin of error.

The economic modelling shows that the Kalkaroo copper-gold deposit can produce substantial cash surpluses at metal prices considerably below those currently prevailing.

Havilah is presently evaluating a lower capital start up option that will treat the soft saprolite gold and native copper ore from the upper part of the orebody in a gravity processing circuit. This will potentially provide an earlier cashflow for a lower risk, lower capital option, with this cashflow being directed towards building the more expensive sulphide processing circuit, which will commence operation after year 3.

Native Copper Samples - Click to enlarge

Table of Assessment and Reporting Criteria

The following tables provides a summary of important criteria related to the assessment and reporting of the Kalkaroo copper-gold resource.

Sampling Techniques, Assay Data, Drilling Details

Criteria	Status
Havilah drillholes used in resource estimation	A total of 307 Havilah drillholes totaling approximately 53,957 metres are included. This includes a total of approximately 13,500m of drill core and 33,600m of RC samples.
Non-Havilah drillholes used in resource estimation	46 earlier non-Havilah drillholes totaling approximately 10,500m were also used in the resource estimation. This includes three generations of pre-Havilah drillholes, completed by major mining companies, namely Placer Dome, Newcrest and MIM. There is good correlation of the geology and assay data between these earlier drillholes and Havilah drillholes.
Drilling techniques	All RC holes were drilled using standard face sampling hammers with bit sizes ranging from 120mm to 136mm. Diamond core sizes ranged from NQ (50mm) to PQ3 (83mm). Triple tube methods were used where required to maximize core recoveries. Drill core was routinely orientated where ground conditions allowed, mainly using the spear technique.
Sampling techniques	RC assay samples averaging 2-3kg were riffle split as 1-2m intervals. Half core samples were collected on 1m intervals.
Drill sample recovery	Overall RC sample recoveries and diamond drill core recoveries were good and are considered adequate for interpretation purposes. Core recovery for Havilah diamond drillholes averaged 93 %.
Logging	All RC samples and drillcore was logged by experienced geologists directly into a digital logging system with data uploaded into an Access database. All drillcore and RC chip trays have been photographed. All drillcore is stored on site at Kalkaroo.
Quality of assay data and laboratory tests	A range of elements were analysed by a range of slightly different techniques by the four companies, all of which are considered acceptable. Havilah samples were also subjected to the following additional check assaying to provide more reliable results where coarser grained native copper and to a lesser extent, gold, was present. Screen copper analyses were routinely carried out for samples where native copper had been identified during geological logging. Screen fire gold analyses were routinely carried out where the initial gold assays were in excess of 0.5ppm. Assay data accuracy and precision was continuously checked through submission of field and laboratory standards, blanks and repeats which were inserted at a nominal rate of approximately 1 per 20 drill samples. No data quality issues of significance were identified.
Verification of drilling methods and sampling	Ten pairs of twinned RC/DD holes were analysed with comparisons made for the relative intersection widths, hole size, volume differences, metre x %Cu and metre x gm Au, RC sample size and quality and any possible contamination issues. It was found that although there were wide variations in total copper metal and gold metal calculations between twinned holes, the overall average RC and drillcore metal calculations produced similar results (within 8% for copper and within 6% for gold). There was no observed bias between the drill methods and no significant differences in intersection widths.
Location of drillholes	Drillhole collar coordinates were surveyed in UTM coordinates using a differential GPS system with an x:y:z accuracy of 20cm:20cm:40cm. Diamond drillholes were surveyed at approximately 30m downhole intervals using either a single or multi-shot down-hole camera. Earlier Havilah RC holes were not surveyed and were assumed not to have deviated significantly from their collar azimuth and inclination. Most later RC holes were surveyed in the rods with only dip measurements recorded. The last RC program used non magnetic drill rods to allow dip and azimuth readings to be collected with only minor (±1º) deviations noted.
Drillhole spacing and distribution	Havilah drilling was completed on nominal 50m sections perpendicular to the strike of the primary copper-gold mineralisation at Kalkaroo West and on nominal 100m sections perpendicular to the strike of the Kalkaroo Main Dome mineralisation. Holes were drilled towards the south at -60 to -75º. Earlier non-Havilah holes were drilled at various oblique angles and directions including to the north. The intersection angle is between 60 and 90 degrees through the Kalkaroo Main Dome style mineralisation and between 20 and 45 degrees through the more steeply dipping Kalkaroo West vein style mineralisation. Resource drilling is predominantly concentrated between 453800E and 456600E and between 6488500N and 6490000N. The deposit is largely untested deeper than 250m below surface.

Estimating and Reporting of Mineral Resources

Criteria	Status
Database integrity	Examination of the database has not revealed any issues of concern that could significantly affect the current resource estimation.
Geological interpretation	The mineralisation at Kalkaroo is located around the north plunging nose of a major structural dome and the bulk of the mineralisation is hosted by a specific package of sediments, the Mine Sequence (MS). The Dome is transected by a major E-W trending, subvertical, quartz-carbonate vein breccia system. A later shear offsets the MS and vein/breccia system by 200m to the north along the western limb of the Dome. Primary copper-gold sulphide mineralisation at Kalkaroo occurs as two main styles. Stratabound style – Kalkaroo Main Dome and lesser Kalkaroo West - mineralisation is hosted within the MS which dips away from the Dome at 30-45º. Vein/Breccia style - mainly Kalkaroo West - mineralisation is controlled by the quartz-carbonate breccia vein system within a gently W plunging anticlinal fold containing the MS. Best veining, alteration and mineralisation appears to be developed where the vein/breccia system intersects the MS lithologies. Secondary/supergene copper-gold mineralisation is developed as saprolite/oxide gold, native copper and chalcocite dominant zones within the weathering profile. The depth of weathering and associated supergene mineralisation is enhanced around the vein/breccia style mineralisation at Kalkaroo West where it reaches 275m below surface.
Estimation and Modelling Techniques	Polygons and hence triangulations are based on interpretations completed on nominal 50m sections for Kalkaroo West and nominal 100m sections for Kalkaroo Main Dome. Sectional interpretations are made perpendicular to the strike. Triangulated interpretations have been generated for the following lithological domains: Kalkaroo Main Dome East (KME) Kalkaroo Main Dome West (KMW) Kalkaroo West (KWEST) Kalkaroo West Quartz Vein (KWESTQV) The block model was constructed with parent blocks of 10mE by 10mN by 10mRL. Ordinary kriging was used to estimate Cu, Au grades separately for all domains other than those classified as saprolite. Inverse distance estimation was used in saprolite domains. Up to four estimation passes with increasing search neighbourhood size were run for all domains. The search radii for each pass was determined from variography within each domain and differed from domain to domain. 2m assay composites were used. A minimum of 3 and maximum of 9 composites were used per estimate.
Moisture	Tonnes have been estimated on a dry basis.
Cut-off parameters	Mineral resources have been reported including all material included within a $20 metal value boundary interpreted from drill assays using Au price of A$1,000/oz and a copper price of A$5,000/tonne.
Bulk density	A total of 11,774 core samples were measured for density. Most SG calculations were made using the weight in air vs weight in water method.
Classification	Mineral resources have been classified on the basis of geological confidence in the continuity of mineralisation. In the geologist’s opinion there is an extremely low likelihood that further drilling within the resource envelope would materially alter the current resource estimate.